May 16, 2018 / 1:40 PM / in 2 years

CANADA FX DEBT-C$ strengthens, boosted by factory sales gain

    * Canadian dollar at C$1.2834, or 77.92 U.S. cents
    * Bond prices mixed across yield curve

    TORONTO, May 16 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Wednesday as domestic data
showed stronger-than-expected growth in manufacturing sales and
the Trump administration said it was pushing for a deal on a
revamped NAFTA.
    Canadian factory sales rose 1.4 percent in March, surpassing
the 1.2 percent gain expected by economists, and February's
increase was upwardly revised to 2.7 percent from a previously
reported 1.9 percent, Statistics Canada said.             
    The United States is pushing for a deal in negotiations on a
revised North American Free Trade Agreement and President Donald
Trump is committed to getting a better agreement with Canada and
Mexico, the White House said on Wednesday.             
    Canada sends about 75 percent of its exports to the United
States, so its economy could benefit if a NAFTA deal is reached.
    At 9:19 a.m. EDT (1319 GMT), the Canadian dollar         
was trading 0.3 percent higher at C$1.2834 to the greenback, or
77.92 U.S. cents. The currency traded in a range of C$1.2832 to
    Gains for the loonie came as Canadian Finance Minister Bill
Morneau said that the government is prepared to indemnify Kinder
Morgan Canada Ltd's          proposed Trans Mountain pipeline
expansion against unnecessary delays that are politically
    Bank of Canada Deputy Governor Lawrence Schembri will give a
speech on the challenges and opportunities of reaching economic
potential. His prepared remarks will be released at 12:15 EDT
(1615 GMT).
    The central bank appears to be losing sway in its own
backyard as bond yields there chase after rising U.S. interest
rates even though Canadian policymakers have pledged to proceed
slowly with rate hikes of their own.                
    The price of oil, one of Canada's major exports, eased after
a rise in U.S. crude inventory added to signs demand may be
slowing. U.S. crude        prices were down 0.66 percent at
$70.84 a barrel.
    The U.S. dollar        resumed its powerful, monthlong rally
as the euro slumped to a five-month low after reports that a
likely future Italian government would seek debt forgiveness
from European creditors.             
    Canadian government bond prices were mixed across the yield
curve, with the two-year            down 0.5 Canadian cent to
yield 2.041 percent and the 10-year             rising 8
Canadian cents to yield 2.475 percent.
    On Tuesday, the 10-year yield touched its highest intraday
level since April 2014 at 2.521 percent.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
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